Deliverable commodity investment vehicle

ABSTRACT

A supply of a commodity is owned by an investment vehicle. A sponsor of the investment vehicle receives a delivery application. A custodian stores the supply of the commodity as a collection of first physical units. A commodity dealer specializing in trading the commodity agrees to conduct trades with the sponsor to convert a first quantity of the supply for a second quantity of the commodity. A broker dealer trades shares of the investment vehicle. The delivery application is provided by a shareholder, and specifies a physical format for the second quantity of the commodity.

BACKGROUND OF THE INVENTION

Commodities provide an appealing investment class for conscientiousinvestors that are interested in diversifying their portfolio. Unlikeequities, bonds, and currencies, commodities do not run the risk ofdefault as they have intrinsic value. Gold, for example, is one of themost ancient and reliable store houses of value known to humankind.Furthermore, commodity prices exhibit one of the hallmarks of investordiversification as changes in their prices may counteract changes in thevalue of other asset classes. As such, commodities may be considered asafe haven investment, means of diversifying an investment portfolio,and hedge against inflation.

The key drawback to commodities as an investment is the fact that theirphysical nature makes them somewhat incompatible with the speed andinterconnectivity of the modern financial system. As a result, a commonsubstitute for direct investment in a commodity was to invest inequities associated with producers of that commodity. For example, aninvestor interested in investing in gold would invest in gold miningcompanies. However, this solution partly defeats the purpose ofinvesting in commodities in the first place because an investor is thenexposed to an array of other risks, including the risk of the producersdefaulting; as such, the use of the investment as a diversifier isthereby somewhat mitigated. Institutional investors have also been ableto invest in commodities through access to more complex financialproducts, including financial derivatives, such as futures; however,these financial products have not been traditionally available to retailinvestors. Ordinary retail investors have historically been preventedfrom investing directly in commodities.

Recently, financial products that allow retail investors to invest ingold directly have become more readily available through the use ofsecuritized pools of gold. Through securitization, the value of acommodity can be disassociated with the physical nature of thecommodity. Shares of a pool of the commodity can be traded so that atransfer of the shares is the legal equivalent of the transfer of aphysical portion of that common pool from one party to another. Thesefinancial products, such as the Merk Gold Trust, show significantpromise for enabling the retail investors of the world to invest incommodities as a pure asset class—wholly distinct from equities andbonds. However, financial products in this class can exhibit significantdrawbacks that prevent them from reaching their full potential.

The financial products at issue have at least three main drawbacks.First, they are plagued by the fact that taking delivery of a commodityis prohibitively expensive and is in some cases completely impossible.This is not a trivial problem. If a user is not able to take possessionof the commodity in the pool, their ownership of the commodity may beconsidered a legal fiction. No matter how strongly that fiction may beenforced, it is not true money-in-the-hand ownership. Second, theinvestment vehicles holding commodities generally store commoditiesusing a format that is incompatible with how a retail investor wouldprefer to hold the commodity. Taking gold as an example, the commodityhere is stored in the institutional system in the form of London GoodDelivery Bars which are irregular in terms of both size and purity. Itis therefore difficult for a retail investor to serve as an adequatecustodian of these bars, and the liquidity of the bars dropsprecipitously when they are removed from the institutional system. Whenthe bars are input into the institutional system, their weight andpurity is determined and guaranteed, and that guarantee attaches to thebar as it is transferred from one institution to the next; the industryrefers to this as the “Chain of Integrity”. The same is not true forindividual investors, which is why standardized coins or bars arepreferred. Third, without the ability to take delivery of the gold,retail investors may never be convinced that the pools they areinvesting in actually have the commodity they say they do. To the extentlarge institutions can take delivery of gold, custodians of pools ofcommodity usually only deliver the commodity “unallocated” which meansthat ownership is not assigned to a specific physical unit, raisingquestions as to whether stake holders in the administration ofinvestment vehicles holding commodities are keeping adequate track ofthe perceived and actual amount of the commodity in the pool. Not onlythat, but unallocated commodities again have counterparty risk, as theyrepresent a claim against the institution holding the commodity, not anownership of the commodity itself; the institution might, in turn, leaseout the commodity, which is why unallocated gold, for example, is alsoreferred to as “paper gold”, as well as have numerousinstitution-specific liabilities. In the case of gold, only gold held ona segregated, “allocated” basis is an ownership claim of a specific goldbar. Such pools might have their commodity holdings audited; but withoutthe ability to take delivery of the commodity, such audits do notnecessarily alleviate the concern of investors that the commodity isindeed held by the pool.

SUMMARY OF INVENTION

In one embodiment of the invention, a system is provided for deliveringa commodity to a delivery applicant. The system includes a trust forissuing shares that represent an interest in the trust, and for owning asupply of the commodity. The system also includes a trust custodianaccount for storing at least a portion of the supply where the supplyhas a first physical composition. The system also includes a commoditydealer account for conducting over-the-counter trades with the trustcustodian account. The over-the-counter trades convert the firstquantity of the supply in the trust custodian account to a secondquantity of the commodity. The delivery application form is used by thedelivery applicant shareholder to selectively define a conversionspecification that defines a physical composition for the secondquantity.

In another embodiment of the invention, a system is provided forreceiving a fee for providing a conversion of a commodity. The systemincludes a supply of a commodity owned by an investment vehicle that isconfigured to be owned by a shareholder. The system also includes asponsor for establishing the investment vehicle, collecting the fee, andreceiving a delivery application. The system also includes a custodianfor storing the supply of the commodity that is stored as a collectionof first physical units. The system also includes a commodity dealerspecializing in trading the commodity that has agreed to conduct tradeswith the sponsor to convert a first quantity of the supply for a secondquantity of the commodity. The system also includes a broker dealer fortrading shares of the investment vehicle. The delivery application isprovided by the shareholder, and specifies a physical format for thesecond quantity of the commodity. The fee is collected from theshareholder after the shareholder completes the delivery application.

In another embodiment of the invention, a method is provided. The methodincludes arranging for the creation of a trust that has shares thatreflect a performance price of a commodity less the operation expensesof the trust. The commodity is stored by a custodian and the shares aretraded by a broker. The method also includes reviewing a deliveryapplication that is provided by a delivery applicant and contains acommodity delivery specification. The method also includes pre-approvingthe delivery application. The method also includes coordinating with acommodity dealer to fulfill the commodity delivery specification. Themethod also includes arranging for the delivery of a customer commoditydelivery to the delivery applicant that matches the commodity deliveryspecification. After the pre-approving step of the method, the custodiantransacts with the commodity dealer to convert the commodity to thecustomer commodity delivery.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 illustrates a block diagram of a system for providing delivery ofa precious metal to a delivery applicant shareholder that is inaccordance with embodiments of the present invention.

FIG. 2 illustrates a flow chart of a method of accepting and processinga delivery application that is in accordance with embodiments of thepresent invention.

FIG. 3 illustrates a flow chart of a method of delivering a quantitycommodity to a delivery applicant that is in accordance with embodimentsof the present invention.

FIG. 4 illustrates a flow chart of a method of delivering a quantity ofa commodity in a specified format to a delivery applicant that is inaccordance with embodiments of the present invention.

FIG. 5 illustrates a flow chart of a method conducted by a sponsor of adeliverable commodity investment vehicle that is in accordance withembodiments of the present invention.

DETAILED DESCRIPTION OF THE EMBODIMENTS

Reference now will be made in detail to embodiments of the disclosedinvention, one or more examples of which are illustrated in theaccompanying drawings. Each example is provided by way of explanation ofthe present technology, not as a limitation of the present technology.In fact, it will be apparent to those skilled in the art thatmodifications and variations can be made in the present technologywithout departing from the spirit and scope thereof. For instance,features illustrated or described as part of one embodiment may be usedwith another embodiment to yield a still further embodiment. Thus, it isintended that the present subject matter covers all such modificationsand variations within the scope of the appended claims and theirequivalents.

The invention relates generally to systems and methods for investing incommodities, and more specifically to commodity investment vehiclesoffering a conversion or delivery feature.

On Apr. 20, 2012, the assignee of the present application at the time offiling—Merk Investments LLC—filed an S-1 with the SEC registering afinancial product. The exact name of the registrant in that filing was:Merk Gold Trust. The contents of this document is incorporated herein byreference in their entirety.

Embodiments of the present invention provide a deliverable commodityinvestment vehicle. An investment vehicle including both thesecuritization of a commodity, and the option to take physical deliveryof that commodity on demand on any business day, will provide ownerswith both a convenient and liquid method of investing in a commodity,while at the same time providing the greater certainty accompanyingactual physical ownership. If delivery includes the ability to convertthe commodity into a different—and more desirable—format, problems withthe lack of compatibility of the institutional and retail markets forcommodities can likewise be alleviated. Embodiments disclosed hereinprovide these and other benefits.

FIG. 1 illustrates a block diagram of a system 100 for providingdelivery of a commodity, for example gold, to a delivery applicant. Thedelivery applicant is a pro-rata investor in an investment vehicle.System 100 also enables a sponsor of the investment vehicle to collectan exchange fee. System 100 comprises trust 101. Trust 101 issue shares101 s in baskets of a predetermined amount in return for deposits of thecommodity on which the investment vehicle is based; references to trust101 herein, may refer to the trust's trustee as agent for the trust.Note that in the situation in system 100, the investment vehicle is anexchange traded fund utilizing a trust, but the investment vehicle couldbe any other type of registered or non-registered investment vehicle, aswell as exchange traded or non-exchange traded vehicle. These includevehicles such as open-end or closed-end investment companies (also knownas mutual funds and closed-end funds), commodity pools, exchange tradednotes (ETNs), exchange traded products (ETPs), futures funds, derivativefunds, fund of funds, limited or general partnerships, master-limitedpartnerships and any other legal construct capable of a serving as apotential vehicle for investment, including legal constructs that do notyet exist.

The shares 101 s are generally issued to a broker 102. Although only onebroker is shown, multiple brokers can be involved with system 100.Shares 101 s are provided to broker 102 in response to broker 102delivering a volume of a commodity and assuring that the commodity isdeposited with a trust custodian 103 and held in a trust custodianaccount. The trust custodian 103 may be a large institutional commoditydealer such as an international bank or, in the case of gold, a bulliondealer capable of clearing transactions with the London Bullion MarketAssociation (LBMA). The shares 101 s that are provided to broker 102represent an ownership interest in the trust. An asset of the trust is asupply of the commodity on which the investment vehicle is based. Forexample, the main asset could be a supply of gold held by trustcustodian 103. Generally the commodity will be stored as a collection ofphysical units having a physical composition. Examples of physical unitsinclude barrels of oil, bars of gold, or bars of silver. Examples of aphysical composition include West Texas Intermediate or London GoodDelivery Bars. An exchange of shares 101 s represent a transfer of theownership of a portion of the commodity stored by trust custodian 103.

In the example where multiple brokers 102 compete with one another (or asingle broker 102 has a contractual obligation), shares 101 s can tradein the marketplace at very low spreads. This is because such brokers 102compete for the business of a) retail investors buying and sellingshares of the trust b) are able to receive new shares of trust 101 atthe trust's net asset value in exchange for supplying commodities to thetrust; and c) are able to hedge their own risk most efficiently becausetrust 101 holds a commodity in a composition that is readily hedgedthrough market instruments. But, in addition to the efficiency andconvenience described above, an investor and delivery applicant 108 insystem 100 can file a delivery application 107 and take delivery of thecommodity underlying the shares in different compositions. While theremay be fees involved for delivery applicant 108 to exchange shares 101 sfor the commodity in physical form, delivery applicant 108 is able topurchase the shares through broker 102 easily and cost-effectively at aprice that reflects the value of the commodity held by the trust, andthen—on any business day in the future—have the choice to file deliveryapplication 107 and take physical possession of the commodity in aformat convenient to delivery applicant 108. Previously, it was notpossible for retail investors to access both institutional efficiency,as well as the convenience of taking delivery of physical commodity of acomposition that's tailored to the needs of such retail investor. As aconcrete example, it is possible for the trust to hold London GoodDelivery Bars that can be invested in easily and cost effectivelythrough the trust, but investors may choose to take delivery of suchgold in the form of, for example, American Gold Eagle coins.

Trust sponsor 109 is set to conduct over-the-counter (OTC) trades 106with commodity dealer 105. These OTC trades exchange a first quantitycomposition of a commodity in the trust custodian account for a secondquantity composition of the commodity with the same underlying commoditycontent. The first and second quantities of the commodity can havedifferent physical compositions. For example, the first physicalcomposition could be London Good Delivery Bars while the secondcomposition could be American Gold Eagle Coins. In order for the OTCtransaction to settle, trust custodian 103 delivers an agreed uponquantity of the commodity to the commodity dealer 105. Commodity dealer105 forms an integral part of system 100. Commodity dealer 105 needs tobe able to engage in a transaction with trust custodian 103, but may bea commodity dealer specializing in trading said commodity incompositions desirable in the retail market. Therefore, commodity dealer105 provides a valuable service because trust custodian 103 may, forexample, be an institutional service provider that is not able to servethe retail commodity market; and broker 102 may, for example, be a FINRAregistered broker-dealer that is prevented by regulation from physicallyhandling commodities such as gold. Commodity dealer 105 is thereforeinstrumental in allowing system 100 to provide a conversion capabilityto the associated investment vehicle.

Delivery application 107 allows a delivery applicant 108 to requestdelivery of a physical quantity of the commodity underlying theinvestment vehicle. The delivery application 107 may be allowed to besubmitted on any business day. Delivery application 107 may allow adelivery applicant to specify a conversion specification that definesthe physical composition of the commodity quantity 110 that deliveryapplicant 108 desires to receive. In examples where the commodity isgold, the commodity quantity 110 could take the format of London GoodDelivery Bars. However, in other examples, the commodity quantity 110will be of a format that is more desirable to retail investors such asstandardized gold bars of a set purity and weight or gold coins mintedby a national government. The availability of these various physicalcompositions is constrained by the types of physical compositionsavailable to commodity dealer 105 to ensure prompt delivery of thecommodity in return for surrendering shares to the Trust. Turning againto the example of gold as the commodity, the physical composition of thecommodity as stored with the trust custodian 103 may be, as describedpreviously, London Good Delivery Bars, and the physical composition ofthe commodity as requested by the delivery application 107 may beAmerican Gold Eagle Coins. The benefit of this particular conversion isthat the commodity changes from a composition that cannot be deliveredto a retail investor by a common delivery service, nor to a residentialaddress to one which is amendable to delivery by a common deliveryservice 111 to a delivery applicant's home address. An example of acommon delivery service 111 includes FedEx or UPS. In contrast, LondonGood Delivery Bars can only be delivered by armored transportation andcan only be delivered to trusted addresses, i.e. not to a residence.

The benefit of the conversion provided by commodity dealer 105 isillustrated by the following discussion. While the commodity is storedwith trust custodian 103 it can be stored in a physical composition thattrades close to the spot price of the commodity. Therefore, theinvestment vehicle retains valuable liquidity and transaction costs aredecreased. At the same time, a retail investor such as deliveryapplicant 108 can obtain delivery of the commodity in a format for whichthey can serve as an adequate custodian and from which they can derivemaximum value and security from physical ownership. It is only when theinvestor requests physical delivery that the investor incurs theadditional costs of trading in physical formats of the commodity thatare less amenable to large scale institutional trading.

Delivery application 107 may impose terms on how many shares aresubmitted to trust 101, so as to ensure that the shares submittedclosely reflect the quantity of the underlying commodity; this isdesirable so as to minimize the shares not corresponding to a full unitof the underlying commodity in the composition specified in the deliveryapplication. In such cases, a cash component may be delivered reflectingthe value of such commodity not delivered in kind. For example, if thetrust custodian stored individual barrels of oil, the quantity thatcould be requested might be restricted to the value of any whole numberof barrels of oil. Minimizing the cash component of a delivery requestprovides significant benefits, not least of which is that a deliveryapplicant is submitting shares because of a desire to receive thephysical commodity. Minimizing the cash component to each transactionmay also provide tax advantages.

Trust sponsor 109 arranges for the creation of trust 100. However, trustsponsor 109, for purposes of facilitating an exchange of shares of adelivery applicant 108 into physical commodity to be delivered, ismerely an agent that never takes physical possession of the gold. Thisprovides an additional benefit in that the anti-money-laundering (AML)responsibility of the investment vehicle remains at broker 102.Similarly, while commodity dealer 105 and trust custodian 103 mayphysically hold commodities, they are agents of the trust, not of thedelivery applicant. The trust's responsibility ends when the physicalcommodity is handed over to delivery service 111. The system and processare therefore highly scalable because it retains AML responsibilities atbroker 102, who has an established relationship with delivery applicant108. As such, many delivery applicants 108 may file deliveryapplications 107 with their respective broker 102. The trust sponsor mayreceive a fee for administrating the system from the trust and may alsocollect a fee from delivery applicant 108 every time a delivery isrequested. The trust sponsor 109 may also be in contact with trust 101,trust custodian 103, commodity dealer 105, and delivery applicant 108via communications network 112. Note that communications network 112 isshown as a single element, but it can be multiple networks.

FIG. 2 illustrates a method 200 of accepting and processing a deliveryapplication. In step 201, a delivery applicant consults with a sponsorto determine the availability of various physical compositions of acommodity owned by the delivery applicant in an investment vehicleassociated with the sponsor. In step 202, the delivery applicantcompletes a deliver application based on information received in step201 and wires the processing or exchange fee to the sponsor along withthe completed delivery application. In step 203, the sponsorpre-approves the delivery application and notifies the deliveryapplicant. In step 204, the deliver applicant irrevocably submits sharesin the investment vehicle to an entity associated with the investmentvehicle such as a trustee in the example where the investment vehicle isa trust. This submission of shares is conducted via the applicant'sbroker and employs industry-standard share submission processes asspecified in delivery instructions.

FIG. 3 illustrates a method 300 of delivering a commodity to a deliveryapplicant. Step 301 can continue from step 204 in method 200. In step301, an entity associated with the investment vehicle, such as a trusteein the example where the investment vehicle is a trust, retires theshares that were submitted with the delivery application in step 204.Depending on the content of the delivery application, method 300 willcontinue with step 302 or step 303. If the delivery application did notrequest a conversion of the commodity, method 300 continues with step302 in which an entity such as the aforementioned trustee instructs acustodian to facilitate delivery of the commodity to the deliveryapplicant. In the situation of a gold backed investment vehicle, thisstep may include the delivery of London Good Delivery Bars to thedelivery applicant from the custodian. If the delivery application didrequest a conversion of the commodity, method 300 continues with step303 in which an entity such as the aforementioned trustee instructs asponsor to facilitate the delivery of the commodity to the deliveryapplicant in a converted format. Step 303 will be followed by both steps304 and a transition via link step 305 to method 400. Step 302 isfollowed by step 304. In step 304, cash proceeds are wired to thedelivery applicant from an entity such as the trustee, or on behalf ofthe trustee by the custodian to balance the value of the sharessubmitted against the closest quantity of the commodity that could bedelivered according to the delivery applicant's specification.

FIG. 4 illustrates a method 400 conducted by a sponsor to facilitate thedelivery of a converted commodity to a delivery applicant. In step 401,the sponsor instructs a commodity dealer to swap a quantity of acommodity for an equal amount of the same commodity in the formatspecified by delivery application 107. To facilitate the transaction,custodian 103 transfers the commodity held on behalf of suchaforementioned trust to the commodity dealer 105; such transfer may takeplace by the custodian 103 first converting the commodity into anunallocated commodity. In the example of gold, the custodian mightconvert allocated gold held on behalf of the trust into unallocated goldto be transferred to the commodity dealer to procure a gold coin or baras specified in the delivery application. In step 402, the sponsorinstructs the dealer to deliver the commodity specified in the deliveryapplication to the delivery applicant. Referring back to method 300, itmay be at this point that step 304 is executed.

FIG. 5 illustrates a method 500 conducted by a sponsor to facilitate thedelivery of a converted commodity from a trust to a delivery applicant.In step 501, the sponsor arranges for the creation and registration ofthe trust. The trust comprises shares that reflect a performance priceof the commodity less operating expenses of the trust. Shares of thetrust are traded by brokers. In step 502, a delivery applicationprovided by a delivery applicant is reviewed which contains a commoditydelivery specification. In step 503, the sponsor pre-approves thedelivery application. Step 503 may be conducted after confirming with acommodity dealer that a specified composition of the commodity meetingthe delivery specification is available and reserved by the commoditydealer. In step 504, the sponsor contracts with the commodity dealer tofulfill the commodity delivery application. In step 505, the sponsorarranges for the delivery of the commodity as described in the deliveryapplication. Method 500 requires a custodian to transact with thecommodity dealer to convert the commodity stored by the trust in acustodian account into a different physical composition as specified inthe delivery application. In certain embodiments, this is an integralpart of steps 504 and 505.

The method described with reference to FIG. 5 could include additionalsteps. The sponsor can collect a fee from the delivery applicant. Thefee could be collected from the delivery applicant as part of thedelivery process. This step could be executed when the deliveryapplication is received. The exchange fee could be set on a periodicbasis prior to when the delivery application contacts the sponsor abouta transaction. Therefore, the cost of the transaction can be determinedahead of time which can offer advantages, as all fees can be paid beforeshares are submitted. The sponsor could also appoint inspectors tomonitor the accounts of the custodian. The sponsor could also instructthe precious commodity dealer to swap unallocated units of the commodityinto a composition of the commodity as described in the deliveryapplication. The sponsor could also notify the delivery applicantdirectly or via the broker when the delivery application is preapproved.The sponsor could impose terms on the number of shares to be specifiedin a delivery application which can offer advantages, such as minimizingthe cash component of the transaction. Finally, the sponsor could imposeterms on the delivery specification to minimize a cash componentgenerated when delivery applicant 108 surrenders shares to the trust 101to facilitate the exchange of shares for the physical commodity.

Although embodiments of the invention have been discussed primarily withrespect to specific embodiments thereof, other variations are possible.Various configurations of the described system may be used in place of,or in addition to, the configurations presented herein. Those skilled inthe art will appreciate that the foregoing description is by way ofexample only, and is not intended to limit the invention. Furthermore,nothing in the disclosure should indicate that the invention is limitedto systems and methods that involve gold or precious metals as theinvention is broadly applicable to other physical commodities such asoil, silver, copper, frozen orange juice, natural gas, and coal. Ingeneral, any diagrams presented are only intended to indicate onepossible configuration, and many variations are possible. Those skilledin the art will also appreciate that methods and systems consistent withthe present invention are suitable for use in a wide range ofapplications encompassing any related to investing in commodities andphysical goods.

While the specification has been described in detail with respect tospecific embodiments of the invention, it will be appreciated that thoseskilled in the art, upon attaining an understanding of the foregoing,may readily conceive of alterations to, variations of, and equivalentsto these embodiments. These and other modifications and variations tothe present invention may be practiced by those skilled in the art,without departing from the spirit and scope of the present invention,which is more particularly set forth in the appended claims.

1-20. (canceled)
 21. A method for sponsoring a deliverable commodityinvestment trust comprising: arranging for the creation of thedeliverable commodity investment trust such that the deliverablecommodity investment trust: (i) holds a commodity and (ii) issues sharesrepresenting a unit of fractional undivided interest in the deliverablecommodity investment trust; receiving a delivery application from thetrust investor that includes: (i) a desired specification for a physicaldelivery of the commodity and (ii) a number of the shares to besurrendered in exchange for the physical delivery of the commodity;requesting a trust custodian to engage in an over-the-countertransaction with a dealer to convert the commodity into the desiredspecification for the physical delivery of the commodity; and arrangingfor the physical delivery of the commodity from the dealer to the trustinvestor.
 22. The method of claim 21, wherein: the commodity is gold;the desired specification specifies that the gold must be gold coins orgold bars; the dealer is a precious metals dealer; and the commodity isheld by a custodian.
 23. The method of claim 21, wherein the physicaldelivery of the commodity is via a conventional shipping carrier. 24.The method of claim 21, further comprising: maintaining a website forthe deliverable commodity investment trust; and pre-approving thedelivery application before the delivery application is submitted to atrustee of the trust; wherein the website includes a calculator forcalculating the number of shares to be surrendered to minimize a cashcomponent of the exchange of the shares for the physical delivery of thecommodity.
 25. The method of claim 24, wherein: the calculatorcalculates the number of shares to be surrendered based at least in parton an accrued cost for holding the commodity, a current price of theshares, and the desired specification for the physical delivery of thecommodity.
 26. The method of claim 24, further comprising: instructingthe trust investor to utilize the calculator to calculate the number ofshares for the delivery application.
 27. The method of claim 24,wherein: pre-approval of the delivery application is contingent upon thenumber of shares minimizing the cash component of the exchange of theshares for the physical delivery of the commodity.
 28. A method forsponsoring a deliverable commodity investment trust comprising:arranging for the creation of the deliverable commodity investment trustsuch that the deliverable commodity investment trust: (i) holds acommodity and (ii) issues shares representing an interest in thedeliverable commodity investment trust; maintaining a website for thetrust that includes a calculator for estimating a physical quantity ofthe commodity and an estimated quantity of cash that can be exchangedfor a number of shares; receiving a delivery application from a trustinvestor that includes: (i) a desired specification for a deliveredphysical quantity of the commodity and (ii) the number of shares ascalculated by the calculator; and pre-approving the delivery applicationbefore the delivery application is sent to a trustee of the deliverablecommodity investment trust to conduct an exchange of the number ofshares for the delivered physical quantity of the commodity and a finalquantity of cash.
 29. The method of claim 28, wherein: the calculatorcalculates the number of shares, and the number of shares is a minimumnumber of shares required to obtain the physical quantity of thecommodity; and the calculator calculates the number of shares based atleast in part on an accrued cost for holding the commodity, a currentprice of the shares, and the desired specification for the deliveredphysical quantity of the commodity.
 30. The method of claim 28, wherein:the desired specification for the delivered physical quantity of thecommodity specifies that the physical quantity of the commodity must beLondon Good Delivery Bars.
 31. The method of claim 28, furthercomprising: collecting a sponsor fee via an allocation of additionalshares representing an interest in the deliverable commodity investmenttrust.
 32. The method of claim 28, further comprising: requesting atrust custodian to engage in an over-the-counter trade with a preciousmetals dealer to convert the commodity to meet the desiredspecification; wherein the commodity is gold and the desiredspecification specifies that the gold must be gold coins or gold bars.33. The method of claim 32, wherein: the over-the-counter trade involvesan exchange of unallocated gold for a number of physical gold coins orgold bars.
 34. The method of claim 33, wherein: the delivered physicalcommodity is delivered via a conventional shipping carrier.
 35. Adeliverable commodity trust administration system comprising: a trustcustodian to store a commodity physically on behalf of the trust; atrustee to coordinate the exchange of a physical quantity of thecommodity for shares of the trust; a trust sponsor to receive andpre-approve a delivery application specifying: (i) a desiredspecification for the physical quantity of the commodity and (ii) anumber of shares to be exchanged for the physical quantity of thecommodity; and a dealer to engage in an over-the-counter trade with thetrust custodian, the over-the-counter trades converting the commodityinto the desired specification.
 36. The system of claim 35, furthercomprising: a conventional shipping carrier to deliver the physicalquantity of the commodity to an investor; wherein the investor providesthe delivery application to the trust sponsor.
 37. The system of claim35, wherein: the desired specification specifies that the physicalquantity of the commodity must be gold coins or gold bars; the commodityis stored by the trust custodian; and the over-the-counter tradeconverts the commodity into the desired specification by exchangingunallocated gold for the physical quantity of the commodity.
 38. Thesystem of claim 35, wherein: the trust sponsor administrates a websitewith a calculator for estimating the physical quantity of the commodityand an estimated quantity of cash that can be exchanged for the numberof shares.
 39. The system of claim 35, wherein: the trust sponsoradministrates a website with a calculator for calculating a minimumnumber of shares that can be exchanged for a desired physical quantityof the commodity.
 40. The system of claim 39, wherein: pre-approval bythe trust sponsor is contingent upon the number of shares to beexchanged for the physical quantity of the commodity from the deliveryapplication being equivalent to the minimum number of shares calculatedby the calculator.